JUDGMENT Shah J.- 1. The Bilaspur Central Co-operative Bank Ltd. hereinafter called 'the Bank'-maintains a, Branch at Pendra Road in the Bilaspur District. As there is at Pendra Road no arrangement for a strong room for keeping in safe custody the cash of this Branch, the Bank requested the Inspector General of Police of the area for permission to lodge the cash box at the end of each day in the police station house Malkhana. The Inspector General of Police granted the permission and accordingly after business hours the cash box property locked and sealed used to be deposited in the police and station house Malkhana. This arrangement continued till April 11, 1950. In the evening of April 11, 1950, according to the usual practice the cash box property locked and sealed was deposited ill the police station house Malkhana. It was found on the next day that the Tear door of the Malkhana was open and the cash box missing. The cash box was found two days thereafter in an open field at some distance from the police station with its hasp broken and the contents missing. The police investigated a case of theft which was registered, but without any tangible results. 2. On June 18, 1951 the Bank filed a suit against the State of Madhya Pradesh in the Court of the Additional District Judge, Bilaspur for a decree for Rs. The police investigated a case of theft which was registered, but without any tangible results. 2. On June 18, 1951 the Bank filed a suit against the State of Madhya Pradesh in the Court of the Additional District Judge, Bilaspur for a decree for Rs. 46,946/7 and interest thereon at the rate of seven per cent per annum from April 12, 1950 to June 13, 1951, alleging that it is registered under the rules and bye-laws of the Co-operative Societies Act and is functioning under that Act under the control of the Registrar, Co-operative Societies, M. P. that the State of Madhya Pradesh runs the Bank as a commercial or mercantile department of the State, in that it regulates and controls the Bank by restricting the constituents of the Bank and prescribing the place or places where its balances have to be kept, and the State also recovers a percentage for its control and on that account the Bank is a Department of the Government, that the cash in the sealed box was "public money" which the State had undertaken to accept for safe custody and by the arrangement between the Bank and the Inspector General of Police the State of Madhya Pradesh Was liable to return to the Bank the amount of Rs. 46,946/7 contained in the cash box and acceptance by the Inspector General of Police of the arrangement subject to the term that the police would take no responsibility for the actual contents of the box could not mean or be interpreted to mean that the Bank agreed to exonerate the State from liability for the loss of the cash box in consequence of the negligence of the servants of the State. 3. The suit was resisted by the State of Madhya Pradesh. The State contended, inter alia, that it was not constituted a bailee of the cash box as alleged by the Bank, that in any event the arrangement made at the request of the Bank through the Registrar of the Co-operative Societies who sought the permission of the Inspector General of Police to deposit the cash box of the Bank in question on the terms that the box would be properly locked and sealed and that the police would not be responsible for the contents of the crests, the suit was not maintainable. It was also contended that the officers of the State took all reasonable care in regard to the cash box that an ordinary person would, in similar circumstances, take of his own similar property, the State could not in law be held liable for the loss of the contents of the cash box. 4. The learned trial Judge dismissed the suit holding that even though the subordinate police officers of the State had failed to take such care of the box as is required by law, the State was not responsible for the consequences arising from the negligence of its subordinates. In appeal to the High Court, the decree passed by the trial Court was reversed. The High Court observed that by the reservation made by the Inspector General of Police in granting permission that the police officers were not to be responsible for the contents of the box the State did not absolve itself from the ordinary liability of a bailee under the general law, that the State was under a duty to select honest and competent servants and their duty in the course of their employment included the duty to look after the property bailed to the State and as the State of Madhya Pradesh was the bailee and the property was stolen, the State must be held liable, if the negligence of the servants was established and the State was shown to have employed dishonest servants or had not supervised their actions. The High Court further observed: "The degree of care needed is laid down in S. 151 of the Indian Contract Act. We are satisfied that there was gross negligence m carrying out the bailment. The Inspector General of police was acting within his powers to grant the permission : Vide Police Regulations 697 and 698. The Co-operative Bank is a Government-supervised Bank, and enjoys a character which is more akin to a Government Department than to a purely private bank. The request of the Bank was joined by a request by the Registrar, Co-operative Societies Central Provinces and Berar. We hold that the Inspector General of Police acted under the above Regulations. We, therefore, hold also that the Government was bound by the action of the Inspector General of Police." 5. In this appeal we are hot concerned with any liabilities of the Inspector General of Police arising under the bailment. We hold that the Inspector General of Police acted under the above Regulations. We, therefore, hold also that the Government was bound by the action of the Inspector General of Police." 5. In this appeal we are hot concerned with any liabilities of the Inspector General of Police arising under the bailment. It was the case of the Bank that there was an arrangement between the Bank and the Inspector General of Police whereunder the latter agreed to keep in the police station house Malkhana at Pendra Road the cash box of the Bank. The Inspector General of Police agreed to hold the property of the Bank as a bailee. Having regard to the terms of the arrangement, we agree with the High Court that the reservation made by the Inspector General of Police that the police officers were not to be responsible for the contents of the box did not operate to limit the responsibility of the bailee under the contract of bailment and thereby the bailee was not absolved from liability to take with regard to the property that degree of care which is prescribed by S. 151 of the Indian Contract Act i.e. such care as a person of ordinary prudence would take of similar property in similar circumstances, if it belonged to him. But we are unable to agree with the High Court that by virtue of the arrangement between the Inspector General of Police and the Bank the State of Madhya Pradesh was liable to compensate the Bank for the loss of the contents of the cash box. The Inspector General of Police is invested by statute with certain authority. It is not suggested that the Inspector General of Police was an agent of the State of Madhya Pradesh for entering into a contract of bailment. The Bank sought to render the State of Madhya Pradesh liable on the plea that the Inspector General of Police was, acting under the powers conferred upon him by Police Regulations, competent to enter into the arrangement which he did and on that account the State was liable if the property belonging to the Bank having been lodged with the Inspector General of Police or his subordinates was lost. In support of its contention the Bank relied upon Regulations 697 and 698 of the C. P. and Berar Police Regulations, 1949, framed under the Police Act V of 1861, which read as follows: "697. MONEYS FROM OTHER DEPARTMENTS CUSTODY OF Officers in charge of police stations are strictly forbidden to take charge of any money or valuable property from other departments unless it is securely 'enclosed in a box with a good lock and sealed in such a manner as to prevent the contents being tampered with. Under these conditions, station-houses may be used temporarily as places of safe deposit of cash-chests' of Government departments. It is only at station-house that arrangements can be made for the safe custody of public money. The time of receipt and of the delivery of any box thus deposited must be noted in the general diary. A receipt must be given to the depositor. 698. For any permanent arrangement whereby Government money is to be regularly lodged in a station-house the sanction of the Inspector General is necessary. Note. - No private money or jewellery belonging to the station staff or private persons may be kept in the station cash-chest. The High Court was of the view that. because the Bank is not a purely private Bank and is supervised by the Government, the Inspector General of Police in entering into the arrangement acted within his powers under Regulations 697 and 898, and on that account the State was liable to the Bank for the loss of its cash box, the State having failed to take in respect of the cash box that degree of care of a bailee as is prescribed by S. 151 of the Contract Act. We are unable to agree with the High Court. 6. Regulation 697 deals with a temporary arrangement for keeping in safe custody with the Police, money or valuable property. In the first instance the officer in charge of a police station is forbidden to take charge of any money or valuable property from other departments unless the money or the valuable property is securely enclosed in a box with a good lock and sealed in such a manner as to prevent the contents being tampered with. The Regulation then emphasises the condition that the station-house may be used temporarily as place of safe deposit of cash-chests of Government departments. The Regulation then emphasises the condition that the station-house may be used temporarily as place of safe deposit of cash-chests of Government departments. There is therefore a prohibition against acceptance by police officers for safe custody of money or valuable property even from other departments of the Government unless it is put in a box and securely enclosed. That necessarily prohibits acceptance of valuable property or money not of Government departments. In the present case the cash box of the Bank did nut contain property of a Government department. The control by the Government over the Bank does not invest it with the character of a Government department. Regulation 697 has, therefore, no application. Regulation 698 deals with cases in which a permanent arrangement is made for keeping Government money in station houses. Such an arrangement can be made with the sanction of the Inspector General of Police, but the sanction of the Inspector General of Police does not make the money or valuables, when lodged in stationhouses money or property of a Government department. Regulation 698 applies only if the money or valuable property lodged in the station-house is "Government money". The cash box of the Bank did not contain Government money or money of a Government department, and the Inspector General of Police in granting the permission cannot be deemed to have acted within the authority conferred upon him by Regulations 697 and 698. The High Court was in our judgment, in error in holding the State of Madhya Pradesh liable on the footing that the, Inspector General of Police acting in exercise of his statutory powers entered into a contract of bailment on behalf of the State of Madhya Pradesh and for failure on the part of the police officers to take such care as a person of ordinay prudence would, in similar circumstances, take of similar property belonging to him, the State was liable. 7. 7. There was evidently a bailment; the evidence also establishes that the police officers in charge of the police station at the material time acted negligently in failing to take reasonable care to protect it against theft, but it cannot be said that the Inspector General of Police acted in exercise of the powers conferred upon him by Regulation 698 read with Regulation 697 in agreeing to arrangement for the lodging of the cash box of the Bank in the station-house Malkhana at Pendra Road. The State was therefore not liable. 8. As we have already observed, the Inspector General of Police was not constituted an agent for the purpose of accepting the bailment on behalf of the State of Madhya Pradesh. It is in the circumstances unnecessary for us to consider the argument advanced by counsel for the State that the contract of bailment did not comply with the requirements of Art.299 of the Constitution and was on that account unenforceable. 9. The appeal is therefore allowed and the plaintiffs suit is dismissed. In the circumstances of the case, there will be no order as to costs throughout.